Is WakeUpNow alive? The death of a marketing scheme

February 9, 2017

Is WakeUpNow dead or alive? With a recent bankruptcy and social media rumors, it may be hard to tell if the marketing scheme is still around.

WakeUpNow was a multi-level marketing (MLM) company based out of Provo, Utah, that sold health and financial service products through a network of distributors. These distributors made money by selling the products and recruiting others to do the same. WakeUpNow used endorsements from rappers to generate buzz to recruit young and eager people who wanted a high roller lifestyle.

Just a few short years after the company started, it failed. According to WakeUpNow’s own income disclosure statements, roughly 95% of distributors made no profit in 2013. Two years later, the company ceased operations and even filed a lawsuit against its former CEO.

As a result, Wake Up Now is Closed Down Now.

Troy Muhlestein started the company in 2009. The products it sold included energy drinks, language learning programs, personal financial management systems, tax software, identity theft protection, and travel discount programs.

Rather than sell these products through a retailer, WakeUpNow relied on an army of distributors to peddle the products. According to an article in the Salt Lake Tribune, “Under its multi-level-marketing business plan, the company sold its products to independent distributors, who earned commissions by recruiting new distributors who, in turn, were encouraged to recruit others into the network.”

However, according to a report by Truth in Advertising, WakeUpNow’s network marketing model was confusing and full of the following dirty secrets:

WakeUpNow was the target of more than 160 complaints filed with the U.S. Federal Trade Commission (FTC). Issues included failure to cancel auto-deliveries or refund money, and instead repeatedly charging credit cards; allegations of being a pyramid scheme; and aggressive marketing tactics (even among the deaf community). Similar complaints were also made to the BBB.

The company operated in the red, losing $3.3 million in 2012 and $4.5 million in 2013.

Many of the products and services WakeUpNow sold were available on the internet and elsewhere for less—and sometimes even for free.

The vast majority of WakeUpNow distributors never made money. Many complained online in negative WakeUpNow reviews.

In short, Truth in Advertising said, “WakeUpNow’s emphasis on recruitment, it’s complicated compensation plan based primarily on getting others to join and not on purchases of its overpriced HUB products to actual customers not affiliated with WUN—that sounds like the trappings of a pyramid scheme.”

Basically, WakeUpNow was a bad player in the otherwise good industry of direct sales that includes MLMs like Amway and Mary Kay, as well many direct-selling companies who are not an MLM.

Apparently, one other problem was poor leadership. When WakeUpNow shut down in 2015, the CEO at the time, Phil Polich, accused the former CEO, Kirby Cochran, of mismanaging the company.

Polich’s statement was quoted in the Daily Herald: ““Kirby Cochran had made decisions that put the company on an irreparable negative trajectory; and sadly, he went to great lengths to keep many of these decisions secret from the rest of the management team and board of directors.”

Prior to the company’s downfall, Truth In Advertising had this to say about WakeUpNow’s top executives:

“Kirby Cochran…has been associated with more than two dozen companies, several of which have had their registrations revoked. One of his companies…filed for bankruptcy in 2011 $40 million in debt. The bankruptcy followed a 2010 $15 million lawsuit alleging racketeering and breach of contract. … The SEC permanently revoked the company’s registration to sell securities because the company repeatedly failed to file required reports. … Polich is heavily in debt with banks and is facing multiple county, state and federal tax liens.”

Perhaps the biggest problem with WakeUpNow—as is the case with many flash-in-the-pan MLMs—was its focus on hype over any real product or service. It wooed distributors by promising them the ultimate lifestyle, which included making money hand over fist and constant travel to and parties in exotic locales.

The insane, confusing hype was even the focus of a segment on NPR’s “This American Life” in 2014 shortly before the company closed down.

“WakeUpNow seemed to be a company, but it was hard to tell exactly what the company did,” NPR’s Ira Glass said. “(WakeUpNow’s) site talked about joining, about becoming a member, about living a better life. So was it a club? Was it an organization?”

NPR sent two reporters to a WakeUpNow conference to figure out exactly what the organization was all about. They left just as confused as when they arrived.

I’m a little embarrassed to admit this,” said reporter Brian Reed, “but even after being at this conference for several hours, if you put a gun to my head and asked me what WakeUpNow is, what it does, I still don’t think I could have told you.”

The other reporter, Bianca Giaever, said: “We talked to dozens of participants, and what we learned is that people were incredibly excited about something they weren’t terribly good at explaining.”

All they really found were empty motivational speeches, given to amped up people—most of them quite young—screaming the company’s name and ogling over the celebrity status of a top distributor. People interviewed seemed to know nothing about the company’s business model. They only knew how pumped up they were to be there. Sadly, those young, enthusiastic people haven’t pumped up about WakeUpNow anymore.

This was a big part of WakeUpNow downfall. They sought out young, eager and gullible people to generate enough revenue to make a few people wealthy. With the vast majority of WakeUpNow independent distributors not making any commissions, the compensation plan is driven business was bound to fail. WakeUpNow was not a product manufacturer, simply a reseller with a commission marketing scheme. Many have compared this company to Empower Network, another company built on the words of motivational speakers and little else.

The death of WakeUpNow is just another in a long line of failed marketing schemes preying on people looking for a shortcut to wealth.